2019 Indian Cashew Kernel Market: Review and Outlook Somnath - PowerPoint PPT Presentation

2019 Indian Cashew Kernel Market: Review and Outlook Somnath Chatterjee Head- Procurement & Logistics ITC Limited- Foods Division

Presentation Flow • FMCG Industry • Consumer Trends • Usage of Cashew • India • Consumption & Production trends • Challenges • Internal • External • 2019 Prospects

Softening FMCG growth. . largely stable over the last few years . . FMCG Value Crores & Growth 70.00 Val Billion $ GOLY 0.3 FORECASTED 27% 60.43 60.00 0.25 53.96 22% 49.21 50.00 19% 19% 0.2 43.15 38.01 38.01 40.00 40.00 15% 15% 14% 33.56 14% 0.15 13% 31.32 12.4% 12% 12% 28.03 30.00 23.53 20.44 0.1 7% 20.00 17.24 13.58 11.14 0.05 10.00 - 0 MAT DEC'07 MAT DEC'08 MAT DEC'09 MAT DEC'10 MAT DEC'11 MAT DEC'12 MAT DEC'13 MAT DEC'14 MAT DEC'15 MAT DEC'16 MAT DEC'17 MAT SEPT'18 MAT Dec'19

Branded Food Industry nearly 30 Billion $ & Growing the fastest Value% Value% 36 6 Top 8 Metro 38 Next 27 Metro FOOD Other Metro NON-FOOD 20 Town Class 1 OTC Rest of Urban Rest of Urban 9 9 3 55 16 16 Rural FMCG : 53.96 Billion $ Food : 29.80 Billion $ CAGR over MAT Store Market Growth % Market Growth % CAGR over MAT Jun 2016 Jun 2016 Contr. % All India 12.4% 13.4% 100% FMCG 12.40% 13.40% Top 8 Metro 10.6% 12.5% 7% Food 13.50% 14.40% Next 27 Metro 11.0% 11.3% 5% Other Metro 13.0% 12.8% 2% Non Food 11.00% 12.20% Town Class 1 13.5% 13.0% 11% Rural 14.5% 14.9% 61% OTC 11.70% 12.30% Store Base : 10.1 Million Stores

Consumer trends are evolving… BUSY LIVES - CONVENIENCE SEEKING ON THE RISE Consumers seeking out products and services that either help facilitate their busy lifestyles or help free up time on less enjoyable tasks PERSONAL SPACE & TIME Consumers seeking out products that offer moments of escapism and comfort, and encourage them to step back from the pressures of everyday life HEALTHY LIVING Consumers are becoming increasingly skeptical of product claims and conscious about the traceability of products and want manufacturers to address these issues want manufacturers to address these issues VALUE WORTHINESS Consumers becoming more discerning and showing a willingness to trade-up or trade-down if they feel an alternative product offers better value for money EXPERIENCE SEEKING Consumers seeking out products that are novel and unusual, even when buying everyday groceries such as exotic flavours or unique packaging TRUST & AUTHENTICITY Focus on full disclosures, ingredients and process information. Brands coerced to build relatable & authentic RTBs.

Factors resulting in shift of demand to dry fruits • Increasing awareness of health needs • Increasing disposable income levels • Nuts and dried fruits carry an overall healthy image • Nuts and dried fruits also carry rich emotional associations, making them one of the most popular choices for gifting in India

Indian Cashew Consumption (Kernel Basis) (Million MT) 0.30 0.28 0.26 0.24 0.22 0.22 0.20 0.18 0.16 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 • India leads the cashew consumption charts in the World • Recorded a growth of over 75% cashew consumption over a period of last 7-8 years

Wide Usage of Cashew

. . . On the production front !!! Cashew Production (Kernel Basis)- In Million MT 0.20 0.85 0.80 0.19 0.75 0.18 0.70 0.17 0.65 0.60 0.16 0.55 0.15 0.50 0.14 0.45 2008-09 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 Indian Production World Production • 18% increase in India in cashew production over a period of last 10 years • However, World cashew production increased by 47% over a period of last 10 years

Production related challenges Poor farm mechanisation Low cashew productivity Higher dependency on imports Stringent factories and labour laws Stringent factories and labour laws Indian RCN Imports (in Million MT) 1.00 0.90 0.80 0.70 0.60 0.50 0.40

Other Internal Challenges. . .

External Challenges. . . Competition from key producing countries Reduced raw nut supplies & raw nut suppliers turning out to be competitors Geo-political concerns Low cost of raw material and processing cost in the raw nut producing countries Subsidized production inputs and external funding in competing countries Counterparty Risk Product Substitution

Likely shift towards. . . Product substitution !

Prospects- 2019 Good cashew crop foreseen in India for 2019 Higher carry over stocks to put pressure on cashew markets Indian markets are expected to grow at 4-5% on consumption Exports might continue to decline to cater to increasing Indian demand Shift from Import-Process-Export to Import-Process-Consume Stiff competition from other nuts like almonds, peanuts